A mental health trust rated outstanding is setting up a subsidiary company that it hopes will make £3m of recurring back-office savings a year by 2018-19.
Northumberland, Tyne and Wear Foundation Trust’s board agreed on Wednesday the business case to create NTW Solutions, which is expected to go live on 1 April.
The company will be a subsidiary wholly owned by the trust, with most its 600 estates services, facilities management and transactional service staff transferring to the new organisation.
NTW Solutions will be granted the 25 year leasehold of a number of trust properties, including:
- Monkwearmouth Hospital;
- Hopewood Park Hospital;
- Ferndene Hospital;
- St Nicholas’ Hospital; and
- Northgate Hospital.
It will buy equipment, furnishings and fittings, plant vehicles and inventory the buildings or company needs to manage the estates, facilities, finance, procurement and workforce for the trust.
NTW Solutions will fund the leases through a £25.5m loan and £10.9m of equity in shares from the trust. It will also have a one-off setup cost of £141,000 for the purchase of consumables and stock.
It will provide estates services, facilities management and transactional services for the trust under an operated healthcare facility contract and service level agreements worth £30m.
The business case said the company model was similar to the one used by QE Facilities in Gateshead and Northumbria Healthcare Facilities Management.
The trust said the savings will help it meet its commitment to the Northumberland, Tyne and Wear and North Durham sustainability and transformation plan, with the patch facing a £641m financial gap by 2020-21.
The FT plans to make £10.6m of savings in 2017-18 and £6.8m in 2018-19. The company will save £1.5m recurring in its first financial year, rising to £3m recurring in the second.
This will be achieved by:
- standardising products and improving efficiency;
- reducing procurement leakage;
- improving managed service efficiency;
- pay efficiencies through terms and conditions for new employees, estimated at a 15 per cent reduction in overall costs; and
- reducing sickness and absence costs.
Trust finance director James Duncan told HSJ the £3m in efficiencies will help the trust meet the recommendations of Lord Carter’s efficiency review.
He said £3m amounted to 10 per cent of the transferring departments’ budgets.
He added: “In terms of the size of the organisation, the savings are quite significant.
“This is being driven by taking hold of all the opportunities we can to make sure we get all the resources we can into frontline services.
“We would not see £3m as the end of the story. This doesn’t include any opportunities for new contracts elsewhere.”
22 March 2017